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Wednesday, November 23, 2016

Business Council boss Grant King says Australian credit rating needs to remain near AAA

Newly-appointed Business Council of Australia Grant King has warned that the government's AAA credit rating is at risk if efforts to repair the budget fail.

Mr King told the ABC's AM programthat a ratings cut "just follows as a matter of logic" after Deloitte Access Economics forecast bigger-than-expected deficits over the next four years.

"If those budget deficits continue to expand then our credit rating will be at risk. I think that would be a correct statement," Mr King said.

"I think it is very important that Australia maintains a high credit rating. Whether it's AAA, it's certainly not much less than that.

"We are seeing indications that the deficit is deteriorating so it is going to be a challenge."

Mr King's warning of an imminent ratings cut came after the ratings agency Standard & Poor's reiterated that the Federal Government has six to 12 months to deliver on more budget savings and revenue measures.

Mr King underscored the importance of Australia maintaining the AAA sovereign rating to ensure it can deliver on services Australians have come to expect during the boom years.

"The government is like the community's insurer of last resort. We expect our governments to look after our community and our citizens if there's a disaster like cyclones in Queensland," Mr King said.

"In order for the government to have that capacity to support the community it has to maintain a good credit rating to be able to fund whatever those circumstances are."

The former Origin Energy chief executive of sixteen years is also expressed concerned that US president-elect Donald Trump will torpedo the Trans Pacific Partnership (TPP) by not participating.

Mr King says despite the absence of the United States, Australia need to find ways to encourage and improve global trade.

"Australia in a global context is a relatively small economy. We don't have a large domestic economy so trade is critical to Australia," Mr King said.

"We have to be an outward looking country. We can't run inwards and look to our own economy."

Mr King's appointment as Business Council president comes after criticism about the business lobby's power and influence from former Future Fund chairman David Murray and Liberal Party powerbroker Michael Kroger.

Former BCA president Catherine Livingstone and current chief executive Jennifer Westacott have been described as "out of touch" and "missing in action".

"Look I think there are many aspects of public debate out there that are making it more and more difficult for any organisation frankly to get its view across," Mr King said.

"So yes it might be right to say it's become more difficult. My hope is that in the next couple of years we can get better and better at that."

Mr King also defended the government's plans for corporate tax cuts of $48 billion over ten years despite perceptions the money will go into shareholders pockets rather than create new jobs.

"What the BCA's arguing for is a reduction in the rate of tax. Business would be happy to pay more tax in total but a lower rate is a key to doing that."

The business push for company tax cuts comes after confirmation that wages are growing at the slowest pace on record.

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About Peter Ryan

Peter Ryan is one of the ABC's most experienced journalists. With more than 30 years in the game, he contributes to a range of ABC News programs including the flagship radio current affairs programs AM and The World Today in addition to ABC News 24 and ABC News Online. As a former ABC Business editor he established Lateline Business (now The Business) and Business Today in 2006 and oversaw the ABC’s business and economics coverage across all platforms. After working in the corporate sector, Peter rejoined the ABC in 2003 as Executive Producer of ABC Television’s Business Breakfast program. Peter's previous journalism career includes three years as the ABC's Head of TV News and Current Affairs in Melbourne; almost five years as Bureau Chief and television correspondent at the ABC's Washington Bureau; a year as a producer at the BBC in London and a range of ABC reporting and producing roles in Melbourne, Sydney, Darwin and the South Pacific. Peter began his journalism career in newspapers at Sydney's Daily Mirror in 1980 and he worked in Sydney commercial radio before joining the ABC in 1984.